Bank Account

What would you do if you logged in to your bank account someday and it showed that you had a zero balance and your bank had no record that you ever had any money in your account? What would you do if all of the money in your bank account suddenly disappeared in a single moment? If you had not kept any paper records, which most Americans do not, it would be exceedingly difficult to prove to the bank that you actually had any money in the bank. If you don’t think that something like this could ever happen in the United States, you might want to think again. Cyber attacks against major banks in the United States are becoming more powerful and more sophisticated with each passing month. In fact, major U.S. bank websites have been offline for a total of 249 hours over the past six weeks. And just last month, thousands upon thousands of Chase customers logged into their bank accounts only to discover that their balances had all been reset to zero. Anyone that would want to cause complete and total economic chaos in the United States could accomplish it very easily by wiping out all of our bank account records. So please do not keep all of your money in a single bank, and from now on please keep a paper copy of all of your bank account statements. At some point it is likely that one of these cyber attacks will cause permanent damage to our banking system, and you want to be protected.

The mainstream media has generally been very quiet about the massive cyber attacks against our major banks, but behind the scenes authorities are truly alarmed. They don’t know how to stop these attacks, and they just keep getting more intense and more sophisticated.

Could you imagine how you would feel if you logged in to your bank account and all of your money was gone? That is exactly what happened to some Chase customers last month. The following is from a recent CNET article…

JP Morgan Chase denied this evening that it had suffered a hack that many customers claimed had suddenly reduced their checking account balances to zero.

After discovering the apparently empty accounts via the Internet or mobile devices, many Chase banking customers turned to Twitter to express their frustration and show screen shots of zero balances. Other users were greeted with messages that their bank account balances were unavailable.

But this was most definitely not an isolated incident. That same article noted that Chase and many of our other large banks have had their websites taken down for extended periods of time lately…

Customers’ suspicions about a possible security breach are natural, with the zero balances appearing less than a week after a massive distributed-denial-of-service attack rendered Chase’s Web sites useless for many hours. Customers trying to use the site’s tools were instead greeted with a note that the site was “temporarily down.”

Hackers have ratcheted up their assaults on financial institutions in recent months, using DDoS attacks to take down Wells Fargo, Bank of America, Chase, Citigroup, HSBC, and others.

In fact, as I mentioned above, major U.S. bank websites have been offline for an astounding 249 hours over the last six weeks alone. The attacks just keep getting larger and bank officials are becoming very alarmed about the power of these cyber attacks. The following is from an article that was posted on CNBC this week…

Major U.S. bank websites have been offline a total of 249 hours in the past six weeks, perhaps the clearest indication yet that American companies are prime targets in an unrelenting, global cyber conflict.

The heavier-than-usual outages are the result of a remarkable, sustained attack that began seven months ago and repeatedly knocks banks offline for hours at a time, frustrating consumers and bank security professionals alike.

“Literally, these banks are just in war rooms, sitting at controls trying to stop (the attacks),” said Avivah Litan, a bank security analyst with Gartner Group, a consulting firm. “The frightening thing is (the attackers) are not using as much resources as they have on call. The attacks could be bigger.”

So who is behind these attacks?

Some are blaming Chinese hackers, others believe that Iran is behind the attacks, and yet others are convinced that it is the work of Islamic terrorists.

It is kind of frightening that they cannot positively identify who is behind these attacks. Whoever it is, they sure do seem to have a tremendous amount of resources and they are very sophisticated.

And in the future, it may not be hackers on the other side of the globe that are attacking our banks. In fact, if someone wanted to “recapitalize the banks”, all they would have to do is wipe out all of our bank account records (including all backup records). Suddenly trillions of dollars of “unsecured liabilities” (that is what our bank accounts are) would be wiped out and the banks would suddenly be solvent again. Anyone that could not produce evidence that they actually had money in the banks would be in a lot of trouble. It would be the largest single wealth transfer in the history of the world, and it would throw the U.S. economy into utter chaos. This is a scenario that I am exploring in my new novel which will be coming out later this month.

In addition, there is the constant threat that a massive EMP burst could fry all of our electronics (including the banking records), but that is a topic that I have covered in a previous article.

And of course another way that your bank account could be wiped out in a single moment is if the government decides to “legally” steal it. We just witnessed this happen in Cyprus. In February, the Central Bank of Cyprus swore that such a thing could never possibly happen, but then one month later it did happen. The politicians will lie to your face until the very day comes when they steal your money.

Sadly, a very similar thing could easily happen in the United States someday. As I wrote about yesterday, the big banks are making incredibly reckless bets with our money. When those bets go bad, our money could very well be used to cover those bets.

One way this could be accomplished is by using a practice known as “rehypothecation”. It sounds complicated, but it really isn’t. Basically, the banks use money that clients have entrusted to them to cover their own gambling debts. This is how rehypothecaton is defined by Investopedia…

“The practice by banks and brokers of using, for their own purposes, assets that have been posted as collateral by their clients.”

An excellent article by Jeff Nielson detailed how this could result in the big banks grabbing our money when their trillions of dollars of reckless bets go bad…

1) Our banking regulators knowingly allow financial institutions to engage in recklessly misleading (if not outright fraudulent) contracts with their clients, through the use of complex “small print” in their account contracts with clients.

2) The three largest U.S. “banks” by deposit (JP Morgan, Bank of America, Citigroup) have made bets in their own rigged casino, which total well in excess of $100 trillion, an amount which completely dwarfs their total, combined deposits (and assets).

3) A large portion of those bets occur in the $60+ trillion credit default swap market. Pay-outs in these markets can (and do) exceed 300 times the amount of the original bet. It is bets in this market which “blew up” AIG, requiring more than $150 billion in immediate government aid.

4) Following the Crash of ’08; these same banks mooched a package of hand-outs, tax-breaks and “guarantees” (i.e. future hand-outs) from the Bush regime in excess of $15 trillion, the last time their gambling debts went bad on them – and all of these banks have been allowed to dramatically increase the total amount of their gambling since then.

5) It would take only a minor change in the gambling contracts in which these bankers engage to allow their creditors to seize funds out of ordinary bank accounts.

6) The existing language for the bank accounts of these U.S. banks is possibly already so vague (and prejudicial to clients) that it would allow these banks to reinterpret the terms of these bank accounts – and allow rehypothecation to be used to rob the holders of ordinary bank accounts, people who themselves make no “bets” in markets whatsoever. Alternately, customers could be blitzed with an offer for “new and improved” bank accounts, where terms allowing rehypothecation are slipped into the contract, with the banks knowing that the “regulators” will do nothing to warn account-holders of the gigantic risk they are taking.

But we are all covered by deposit insurance, right?

That is what the people of Cyprus thought too.

As we just saw in Cyprus, when there is a “banking crisis” sometimes government steps in and suddenly changes all of the rules overnight even though the vast majority of the population is against it.

Hopefully you can see that no bank account will ever truly be “safe” ever again.

Your money may be safe today, and your money may be there next week, but someday it could disappear in a single moment.

And the general public is definitely starting to lose faith in the banking system. Google searches for the term “bank run” have been absolutely spiking recently. Just check out this chart which shows that searches for “bank run” are now the highest that they have ever been.

So what should we all do to protect ourselves?

As I mentioned earlier, it is important to not have all of your money in one bank, and from now on you will want to permanently keep paper copies of all of your bank account statements.

Someday you may need those statements in order to prove that you actually had money in the bank.

Our world is becoming increasingly unstable, and at some point financial disaster is going to strike.

By taking prudent precautions now, hopefully you will be able to minimize the damage to your family.

Don’t be surprised when the global elite confiscate money from your bank account one day. They are already very clearly telling you that they are going to do it. Dutch Finance Minister Jeroen Dijsselbloem is the president of the Eurogroup – an organization of eurozone finance ministers that was instrumental in putting together the Cyprus “deal” – and he has said publicly that what has just happened in Cyprus will serve as a blueprint for future bank bailouts. What that means is that when the chips are down, they are going to come after YOUR money. So why should anyone put a large amount of money in the bank at this point? Perhaps you can make one or two percent on your money if you shop around for a really good deal, but there is also a chance that 40 percent (or more) of your money will be confiscated if the bank fails. And considering the fact that there are vast numbers of banks all over the United States and Europe that are teetering on the verge of insolvency, why would anyone want to take such a risk? What the global elite have done is that they have messed around with the fundamental trust that people have in the banking system. In order for any financial system to work, people must have faith in the safety and security of that financial system. People put their money in the bank because they think that it will be safe there. If you take away that feeling of safety, you jeopardize the entire system.

So exactly how did the big banks in Cyprus get into so much trouble? Well, they have been doing exactly what hundreds of other large banks all over the U.S. and Europe have been doing. They have been gambling with our money. In particular, the big banks in Cyprus made huge bets on Greek sovereign debt which ended up failing.

But what happened in Cyprus is just the tip of the iceberg. All over the planet major financial institutions are being incredibly reckless with client money. They are leveraged to the hilt and they have transformed the global financial system into a gigantic casino.

If they win on their bets, they become fabulously wealthy.

If they lose on their bets, they know that the politicians won’t let the banks fail. They know that they will get bailed out one way or another.

And who pays?

We do.

Either our tax dollars are used to fund a government-sponsored bailout, or as we have just witnessed in Cyprus, money is directly confiscated from our bank accounts.

And then the game begins again.

People need to understand that the precedent that has just been set in Cyprus is a game changer.

The next time that a major bank fails in Greece or Italy or Spain (or in the United States for that matter), the precedent that has been set in Cyprus will be looked to as a “template” for how to handle the situation.

Eurogroup president Jeroen Dijsselbloem has even publicly admitted that what just happened in Cyprus will serve as a model for future bank bailouts. Just check out what he said a few days ago…

“If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’. If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders”

“It will force all financial institutions, as well as investors, to think about the risks they are taking on because they will now have to realise that it may also hurt them. The risks might come towards them.”

Well, as depositors in Cyprus just found out, there is a risk that you could lose 40 percent (and that is the best case scenario) of your money if you put it in the bank.

Why would anyone want to take that risk – especially in a nation that is already experiencing very serious financial troubles such as Greece, Italy or Spain?

As if that was not enough, Dijsselbloem later went in front of the Dutch parliament and publicly defended a wealth tax like the one that was just imposed in Cyprus.

Dijsselbloem is being widely criticized, and rightfully so. But at least he is being more honest that many other politicians. His predecessor as the head of the Eurogroup, Jean-Claude Juncker, once said that “you have to lie” to the people in order to keep the financial markets calm…

Mr. Dijsselbloem’s style contrasts with that of his predecessor, Jean-Claude Juncker, Luxembourg’s prime minister, who spoke in a low mumble at news conferences and was expert at sidestepping questions. Mr. Juncker once even advocated lying as a way to prevent financial markets from panicking—as they did Monday after Mr. Dijsselbloem’s comments.

“When it becomes serious, you have to lie,” Mr. Juncker said in April 2011. “If you have pre-indicated possible decisions, you are feeding speculation in the financial markets.”

But Dijsselbloem is certainly not the only one among the global elite that is admitting what is coming next. Just check out what Joerg Kraemer, the chief economist at Commerzbank, recently told Handelsblatt about what he believes should be done in Italy…

“A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product”

Yikes!

And as I wrote about the other day, the Finance Minister of New Zealand is proposing that bank account holders in his nation should be required to “take a haircut” if any banks in his nation fail.

They are telling us what they plan to do.

They are telling us that they plan to raid all of our bank accounts when the global financial system fails.

And calling it a “haircut” does not change the fact of what it really is. The truth is that when they confiscate money from our bank accounts it is outright theft. Just check out what the Daily Mail had to say about the situation in Cyprus…

People who rob old ladies in the street, or hold up security vans, are branded as thieves. Yet when Germany presides over a heist of billions of pounds from private savers’ Cyprus bank accounts, to ‘save the euro’ for the hundredth time, this is claimed as high statesmanship.

It is nothing of the sort. The deal to secure a €10 billion German bailout of the bankrupt Mediterranean island is one of the nastiest and most immoral political acts of modern times.

It has struck fear into the hearts of hundreds of millions of European citizens, because it establishes a dire precedent.

And when you cause paralysis in the banking system, a once thriving economy can freeze up almost overnight. The following is an excerpt from a report from someone that is actually living over in Cyprus…

As it stands now, nowhere in Cyprus accepts credit or debit cards anymore for fear of not being paid, it is CASH ONLY. Businesses have stopped functioning because they cannot pay employees OR pay for the stock they receive because the banks are closed. If the banks remain closed, the economy will be destroyed and STOP COMPLETELY. Looting, robberies and theft are already on the rise. If the banks open now, there will be a massive run on the bank, and the banks will FAIL loosing all of its deposits, also causing an economic crash. TONIGHT there are demonstrations at most street corners and especially at the parliament building (just 2 miles from me).

Many are thinking that the ECB and EU are allowing Cyprus to fail as a test ground for new financial standards.

Just wanted all you guys to know the real story of whats going on here. Prayers are appreciated (although this is very interesting to watch) many of my local friends have lots of money in the banks.

Would similar things happen in the United States if there was a major banking crisis someday?

“The central government’s interest bill surged 15 percent last year to 26 billion euros, while tax receipts slumped 21 percent. The cost of servicing debt represented 30 percent of the taxes collected at the end of December, up from 20 percent a year earlier.”

-The euro took quite a tumble on Thursday and the euro will likely continue to decline steadily in the weeks and months to come.

For a very long time I have been warning that the next major wave of the economic collapse is going to originate in Europe.

Hopefully people are starting to see what I am talking about.

As this point, the major banks in Europe are leveraged about 26 to 1, and that is close to the kind of leverage that Lehman Brothers had when it finally collapsed. As a whole, European banks are drowning in debt, they are taking risks that are almost incomprehensible and now faith in those banks has been greatly undermined by what has happened in Cyprus.

Anyone that cannot see a crisis coming in Europe simply does not understand the financial world. A moment of reckoning is rapidly approaching for Europe. The following is from a recent article by Graham Summers…

At the end of the day, the reason Europe hasn’t been fixed is because CAPITAL SIMPLY ISN’T THERE. Europe and its alleged backstops are out of money. This includes Germany, the ECB and the mega-bailout funds such as the ESM.

Germany has already committed to bailouts that equal 5% of its GDP. The single largest transfer payment ever made by one country to another was the Marshall Plan in which the US transferred an amount equal to 5% of its GDP. Germany WILL NOT exceed this. So don’t count on more money from Germany.

The ECB is chock full of garbage debts which have been pledged as collateral for loans. If anyone of significance defaults in Europe, the ECB is insolvent. Sure it can print more money, but once the BIG collateral call hits, money printing is useless because the amount of money the ECB would have to print would implode the system.

And then of course there are the mega bailout funds such as the ESM. The only problem here is that Spain and Italy make up 30% of the ESM’s supposed “funding.” That’s right, nearly one third of the mega-bailout fund’s capital will come from countries that are bankrupt themselves.

What could go wrong?

Right now, close to half of all money that is on deposit at banks in Europe is uninsured. As people move that uninsured money out of the banks, the amount of money that will be required to “fix the banks” will go up even higher.

It would be wise to try to avoid the big banks at this point – especially those with very large exposure to derivatives. Any financial institution that uses customer money to make reckless bets is not to be trusted.

If you can find a small local bank or credit union to do business with you will probably be better off.

And don’t think that this kind of thing can never happen in the United States.

One of the key players that was pushing the idea of a “wealth tax” in Cyprus was the IMF. And everyone knows that the IMF is heavily dominated by the United States. In fact, the headquarters of the IMF is located right in the heart of Washington D.C. not too far from the White House. When I worked in D.C. I would walk by the IMF headquarters quite a bit.

So if the United States thought that confiscating money from bank accounts was a great idea in Cyprus, why wouldn’t they implement such a thing here under similar circumstances?

The global elite are telling us what they plan to do, and the game has dramatically changed.

The global elite have now proven that when the chips are down they are going to go after any big pile of money that they think they can get their hands on. That means that no bank account, no retirement fund and no stock portfolio on earth is safe. Up until now, most people assumed that private bank accounts were untouchable and that deposit insurance actually meant something. Now we see that there is no pile of money that is considered “off limits” by the global elite and deposit insurance means absolutely nothing. The number one thing that any financial system depends on is faith. If people do not have faith in the safety and stability of a financial system, it will not work. Well, the people that rule the world have just taken a sledgehammer to the trust that we all had in the global financial system. They have broken the unwritten social contract that global banking depends on. So now we will see a run on the banks, and this will not just be limited to a few countries in southern Europe. Rather, this will be worldwide in scope. Yoda may have put it this way: “Begun, the global bank run has.” All over the world, frightened people are going to start pulling money out of the banks. A lot of that money will go into gold, silver and other hard assets. And as money starts coming out of the banks, this could cause many of the large banks that have been teetering on the edge of disaster to finally collapse.

Many of you may not believe that they would ever come after bank accounts, retirement funds or stock portfolios in the United States.

Many of you may be entirely convinced that the Great Cyprus Bank Robbery could never happen in America.

Well, where do you think this whole plan was dreamed up?

It was the IMF that reportedly pushed the hardest for the wealth tax in Cyprus, and the IMF is headquartered right in the heart of Washington D.C.

Almost every nation on the planet has to deal with the IMF. It is an organization that is dominated by the United States and that is always involved when there is an international debt crisis.

If the IMF thinks that it is a great idea to steal from bank accounts to solve a financial crisis in Cyprus, why wouldn’t they impose a similar solution in other countries in the future?

And if bank accounts are no longer safe, are there any truly safe places to put your money?

You can trust the politicians when they tell you that an unannounced “wealth tax” will never happen where you live if you want, but that is the exact same lie that the politicians in Cyprus were telling their people until the day that it happened. The following is from an article in the Cyprus Mail…

And after all, President Anastasiades had emphatically declared in his inauguration speech that “absolutely no reference to a haircut on public debt or deposits will be tolerated,” adding that “such an issue isn’t even up for discussion.” Finance Minister Michalis Sarris made similarly reassuring statements, arguing that it would be lunacy for the EU to impose such a measure because it would threaten the euro system.

At this point, politicians in Cyprus have been given two very unappealing options. Either they vote yes on the wealth tax and destroy all faith in the banking system of Cyprus, or they vote no and they are forced out of the eurozone. In either case, we will probably see the financial system of Cyprus collapse and their economy plunge deep into depression.

At this point, the vote has been delayed until Tuesday. Apparently some additional “arm twisting” was required to get the needed votes.

And there have been proposals to change the terms of the wealth tax. Reportedly, some politicians want to impose a maximum rate of up to 15 percent on bank accounts of over 500,000 euros so that the rate on smaller accounts can be decreased.

It has also been announced that the earliest that banks in Cyprus will reopen will be Thursday.

But what is happening in Cyprus is small potatoes compared to how this will affect the rest of the world. The entire planet is watching this unfold, and as a recent article by Lucas Jackson described, faith in the global financial system is being greatly shaken…

It would be hard to over-emphasize how significant the Cyprus situation is. The EU demonstrated under no uncertain circumstances that they will destroy the rule of law to maintain their own power. It was a recognition of tyranny that many of us have always assumed was the case but yesterday became reality.

The damage done here is not related to the size of the haircut – currently discussed between 3 and 13% – but rather that the legal language which each and every investor on the planet must rely on in order to maintain confidence in the system has been subordinated to the needs of the powerful elite. To the power elite making the major decisions in DC, London, Berlin, France, Brussels, et. al., laws are like ice cream, easily melted.

Which begs the question, who is next? Will it be Portugal? Greece? Spain? Italy? France???

The global elite have declared open season on all large piles of money, and now many people all over the world will consider taking money out of the bank to be the rational thing to do. This will especially be true in countries in southern Europe since they would probably be the next to have wealth confiscated.

All of us should really take a moment to consider what the governments of Europe have done. To be clear, they initiated a surprise assault on the precautionary savings of their own people. Such a move should send shock waves across the entire population of the developed world. This was not a Bernanke style slow moving financial repression against risk free savings that is meant to stir up animal spirits and force risk taking. This is a nuclear war on savings and wealth – something that will likely crush animal spirits. This is a policy move you expect from a dictatorial regime in sub-Saharan Africa, not in an EMU member state. If the European governments can clandestinely expropriate 7 to 10 percent of their hard working citizen’s precautionary savings after the close of business on a Friday night, what else are they capable of doing? Why even hold money in a bank account? Are they trying to start a bank run?

So what motivated the global elite to do this?

According to CNBC, one of the motivations was to go after the Russians that had been using the banking system of Cyprus to launder money…

Indeed, the IMF is reported to have been keen on the levy as a way to stem the flood of Russian money into the island over the last few years which has prompted concerns over money laundering.

Russian money accounts for about 25 percent of all money in the banking system of Cyprus, and obviously the Russians are quite upset by what the IMF and the EU have decided to do. Even Vladimir Putin is loudly denouncing this move…

Russian President Vladimir Putin called the tax “unfair, unprofessional and dangerous,” according to a statement posted on the Kremlin website. Russian companies and individuals have $31 billion of deposits in Cyprus, according to Moody’s.

And you haven’t heard a lot about this in the western media, but the Russians have actually stepped forward and have offered to help Cyprus out of this jam. For example, there are reports that Russian investors are interested in buying the two banks that were the primary cause of this bailout…

Officials have also said Russian investors are interested in buying a majority stake in Cyprus Popular Bank and increasing their holdings in Bank of Cyprus – the two biggest banks on the Mediterranean island.

And according to Sky News, Gazprom has offered Cyprus a very large sum of money for the right to explore their offshore gas reserves that have not been developed yet…

The uncertainty comes as Russia’s finance minister said his country would consider restructuring its loans to Cyprus.

Russian energy giant Gazprom has also reportedly offered financial assistance to Cyprus in exchange for access to the island’s gas reserves.

So far the government of Cyprus has rejected the help of the Russians, but could they change their mind at some point? Apparently the Russians are offering enough money to completely fund the bank bailout…

According Greek Reporter, Gazprom made an offer over the weekend to the Cypriot government to fund the bank restructuring planned under the Cypriot bailout (which is set to cost up to €10bn) in exchange for exclusive exploration rights for Cypriot territorial waters. How reliable this story is remains to be seen, but it does hint at the geopolitical tension which we have been warning about.

Gazprom is known to be very close to the Russian government and despite Russian President Vladimir Putin overtly slamming the deposit tax – calling it “unfair, unprofessional and dangerous” – it is unlikely that they would let this opportunity pass untouched. Fortunately, the Cypriot government is said to have rejected the deal off the bat, but if displeasure towards the eurozone and the EU grows, the Russian option may become increasingly appealing.

It will be very interesting to see what happens.

Meanwhile, some European officials are already suggesting that other nations in southern Europe should have a “wealth tax” imposed upon them. The following comes from an article by Paul Joseph Watson…

Joerg Kraemer, chief economist of the German Commerzbank, has called for private savings accounts in Italy to be similarly plundered. “A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product,” he told Handelsblatt.

A “tax” of 15 percent on all financial assets?

Could you imagine if you woke up one morning and the government had decided to suddenly steal 15 percent of all the money that you had in bank accounts, retirement funds and stock portfolios?

If I had a bank account in Italy I would be very nervous right about now.

Under normal circumstances these kinds of things don’t happen, but governments will use an “emergency” to justify all kinds of things. I recently came across an article that included a great quote by Herbert Hoover that put this beautifully…

“Every collectivist revolution rides in on a Trojan horse of ‘emergency’. It was the tactic of Lenin, Hitler, and Mussolini. In the collectivist sweep over a dozen minor countries of Europe, it was the cry of men striving to get on horseback. And ‘emergency’ became the justification of the subsequent steps. This technique of creating emergency is the greatest achievement that demagoguery attains.”

This is what the elite love to do.

They love to create order out of chaos.

And this is just the beginning. The Great Cyprus Bank Robbery was just a beta test for what is coming next.

As the global financial system crumbles, the global elite are going to target our bank accounts, our retirement funds and our stock portfolios. You might want to start thinking about how you will protect yourself.

So what are your thoughts on all of this? Please feel free to post a comment with your thoughts below…

How do you decide whether you are wealthy or not? Do you determine that by how much money you spend at the stores? Of course not. You can tell if you are wealthy or not by comparing your assets (the money in your bank account, equity in your home, etc.) to your liabilities (your mortgage, credit card debt, student loan debt, etc.). Well, a lot of Americans seem to believe that just because a lot of money is circulating in our economy that it must mean that we are a wealthy nation. But that is simply not true. To tell whether or not America is a wealthy nation, you need to look at the balance sheet numbers. And when you look at the balance sheet numbers, a very sobering story emerges. Over the past three decades, government debt, business debt and household debt have absolutely exploded, but our assets have not. That means that we are getting poorer as a nation. Hopefully the shocking charts and statistics in this article will help a lot of Americans to wake up. Yes, we once were the wealthiest nation on earth, but today America is no longer a wealthy nation.

Household Wealth

We live during a time when U.S. households are becoming poorer. This week the Federal Reserve announced that the total net worth of U.S. households declined by 4.1 percent in the 3rd quarter of 2011 alone.

That is a staggering decline. The total net worth of U.S. households plummeted by $2.2 trillion during those three months. When you break that down, it comes to approximately $7,800 for every single U.S. citizen.

But this is not the first time we have seen a huge decline in U.S. household wealth in recent years.

A recent article posted on CNN detailed the stunning drop in U.S. household wealth that we saw from 2007 to 2009….

Household wealth plunged $16.3 trillion in the two years from early 2007 to the first quarter of 2009, and has slowly been climbing since then. But with the drop in the third quarter of this year, households find their net worth still $9.4 trillion, or 14%, below the high they hit in early 2007, before the bursting of the housing bubble.

So right now the total net worth of U.S. households is $9.4 trillion below what it was back in 2007.

That certainly is not good news.

But not only is the total net worth of U.S. households going down, our incomes are going down as well.

Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

Not that incomes were rising very quickly prior to that time either.

Between 1979 and 2007, income growth for the bottom 90 percent of all U.S. income earners was only about 5 percent for that entire time period.

Meanwhile, household debt was absolutely skyrocketing. Take a look at the following chart which shows what total U.S. household debt has done over the last three decades….

So income growth has been pretty much flat over the past three decades but household debt has been rising at an exponential pace for most of that time.

Yes, there has been a little bit of deleveraging during this economic downturn, but there are now signs that the deleveraging is rapidly coming to an end.

According to a recent CNN article, credit card use in the United States is experiencing a major upswing once again….

Purchases made with credit cards rose 8.2% in the first quarter of 2011, 9% in the second quarter and 10.6% in the third quarter, according to First Data.

That is not good news.

The truth is that U.S. households owe way, way too much money already. According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

We are up to our eyeballs in debt, and our incomes are not keeping up.

In addition, we have seen massive amounts of home equity wiped out in recent years.

An unusual thing has happened during this economic downturn. For the first time in U.S. history, the banks have more equity in our homes than we do. If you do not believe this, just check out this chart.

The truth is that the American people are not becoming wealthier. They are becoming poorer.

And a shocking number of Americans are falling into poverty. In 2010, 2.6 million more Americans fell into poverty, which set a new all-time record for a single year.

But this is not a new thing. This is a trend that we have seen building for many years. Back in the year 2000, 11.3% of all Americans were living in poverty. Today, 15.1% of all Americans are living in poverty.

So obviously U.S. households are not doing well.

But what about the government?

Government Debt

The U.S. national debt is completely and totally out of control. Right now it is sitting at $15,046,397,725,405.16. That means that it is nearly 15 times higher than it was just 30 years ago. Just check out this almost unbelievable chart….

So is our ability to pay these debts 15 times greater than it was back then?

Of course not.

Our liabilities are exploding at an out of control rate but our assets are not.

Whether you are a running a family or running a government, that is a recipe for financial disaster.

The U.S. government has been running budget deficits of over a trillion dollars for several years now, and there is no sign that these trillion dollar deficits are going to stop any time soon.

So how much money is a trillion dollars?

If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

Yet somehow the U.S. government has accumulated a debt that is well over 15 trillion dollars.

The Bush administration was a nightmare when it came to running up debt, but they have definitely been outclassed by the Obama administration….

*Since Barack Obama was sworn in, the share of the national debt per household has increased by $35,835.

And most U.S. government spending does not do a thing to build real wealth for this country. For example, the total compensation that the federal government workforce brought in during 2010 is estimated to be about 447 billion dollars.

So did federal workers create 447 billion dollars of real wealth last year?

Of course not.

The truth is that our bloated federal government is a massive drain on our society.

But the federal government is not the only one with a debt problem.

State and local governments all over America are also drowning in debt. In fact, state and local government debt in America is now sitting at an all-time high of 22 percent of U.S. GDP.

Total Debt

The following chart from the Federal Reserve combines government debt, business debt and consumer debt. As you can see, America is swimming in an ocean of more than 50 trillion dollars of debt….

To get an idea of how bad that is, just look at where total debt was at back in 1970 or 1980.

Over the last three decades we have seen an orgy of debt that has been absolutely unprecedented.

Meanwhile, we are bleeding national wealth at a staggering rate.

Every single month, tens of billions of dollars more goes out of this country than comes into it.

This represents a transfer of wealth that is so vast that it is almost impossible to believe.

Our dependence on foreign oil is greatly contributing to this. It is being projected that for the first time ever, the OPEC nations are going to bring in over a trillion dollars from exporting oil this year. Their biggest customer is the United States.

When we send hundreds of billions of dollars overseas, that is hundreds of billions of dollars that does not go into the pockets of American business owners or American workers.

For a moment, imagine a giant map of the world. Then imagine a pile of 7.5 trillion dollars sitting on the United States of America.

That looks pretty good, eh?

Well, then start taking big chunks of that money and start exchanging it for oil and for cheap plastic products until the entire pile is gone.

Are you starting to understand?

We burn up the foreign oil in our cars and most of the cheap plastic products end up being discarded fairly quickly.

But our loss of national wealth is permanent.

Meanwhile, we are facing national financial obligations in the years ahead that are absolutely nightmarish.

According to Boston University Professor Laurence J. Kotlikoff, the U.S. government is facing a “fiscal gap” of $211 trillion in the decades ahead. The following comes from an article that Kotlikoff wrote for CNN earlier this year….

The government’s total indebtedness — its fiscal gap — now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations — including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt — and all projected future taxes.

If you went out and liquidated all of the assets owned by all American citizens, all U.S. businesses and all levels of government in America, it would only cover about a third of that bill.

Are you starting to get the picture?

America is no longer a wealthy nation.

We are like that family down the street that is always throwing around tons of money but that is always on the verge of bankruptcy.

So when they tell you that the economy “grew” by 1 or 2 percent, please don’t think that means that America is becoming wealthier.

The truth is that our debts are growing at a far, far faster rate than our assets are.